From kettle to pot: Tone down the rhetoric

In 1985 the state Legislature agreed to pay 55 percent of municipalities’ education costs. Since then, the state has not fully funded its promised share. Rather than acknowledging that the state has been irresponsible in not meeting this mandate, the Baldacci administration and various legislators are saying that the Maine Municipal Association is “irresponsible” for initiating a referendum to force the state to meet its obligations. Municipalities, supposedly, are wasting taxpayers’ money. The MMA is not guaranteeing that the extra money will go to schools. The MMA is not telling the state where the extra money will come from to pay for these reimbursements. But are these criticisms germane?

I live in Reed Plantation. We have a fairly high mill rate (.196), but it is not because we are irresponsible. Our employees are at or near the bottom of the pay scale in the state. We spend what the state and federal governments mandate that we must spend on schools and roads, and not much more. These mandates often come to us unfunded, and we have no choice over the matter. We are open to savings that come from cooperation with other towns, but we do not want to be forced into consolidations that cost more. The nearest town big enough to have a shopping center is 40 miles away. No one here is interested in shipping little children on buses for hours a day at an expense greater than educating them locally.

Our town valuation has actually decreased over the last five years, but our expenses have not. Some businesses have moved out. Eighty-five percent of the town is owned by one landowner (from Canada), and all that land is under Tree Growth. Tree Growth valuations, at times, decline. This means that the rest of the taxpayers in the town have to take make up for such tax losses.

The state has not kept its promises about fully funding reimbursements for Tree Growth. It has also slacked off on reimbursements for veteran exemptions and for snowmobile registration. There might also be new fees-for example we might have to pay an annual fee to the Land Use Regulation Commission. So with increased mandates, lowered valuations, but decreased reimbursements, our mill rate is high. This is not due to irresponsibility on the part of the town, but of the state.

The issue of fair taxation needs to be debated, but I wish the Baldacci administration would tone down the rhetoric and stick to the facts, the goals, and the best options for reaching the goals. It is clear that this administration does not want to raise taxes. Tax levels, however, should not be based on the waterbed model, where the state keeps its tax rate down, forcing a rise at the local level. Taxes should be lowered where there are real savings – such as elimination of unnecessary programs or initiation of conservation and efficiencies.

The state has a long tradition of increasing expenses when the economy is good, while at the same time giving away tax breaks to those who can afford lobbyists. Because of these trends, the state gets into big trouble when the economy goes down. Revenues go down, and the tax base is smaller, so those who are left to pay, pay more.

If expenditures cannot be reduced, then new revenues must be raised. By staying attached to a position (no new taxes) rather than an outcome (a more fair tax system and more rational state expenditures), the administration ends up advocating for current inequities to be frozen in place.

In “America: Who Really Pays the Taxes?,” Pulitzer Prize-winning authors Donald Barlett and James Steele concluded that over the last three decades the tax burden has been transferred from: corporations to individuals; the wealthy to the middle class and poor; foreign corporations to domestic corporations; foreign investors to U.S. workers; multinational corporations to medium-sized and small businesses; and the federal government to state and local governments whose taxes are the most regressive.

As if to prove these points, Congress has worked on “tax reform” that includes reducing or eliminating capital gains, dividend, and inheritance taxes – the benefits of which mostly go to the wealthy. These inequities get passed on to the states, which often piggyback their income tax forms to federal forms.

Regressive trends have occurred in Maine as well. Since the 1970s, for example, corporate share of income tax revenues has gone from 30 percent to 8 percent. Property tax and sales tax bases have also narrowed as companies and other special interests have gotten exemptions. Some companies have “double-dipped” in property tax exemptions so they end up paying a “negative” tax. All this has been done without demonstrating that those companies getting the breaks are doing something for the public good (such as creating more or better paying jobs or cleaning up the environment) rather than simply increasing compensation for corporate executives. The burden of proof of frugal spending seems to be higher for Maine municipalities than for foreign corporations.

There have been no proofs that tax breaks for the few improve economic development for the many. Development requires a healthy infrastructure of roads, schools, and services. Such an infrastructure is paid for by taxes. Nobody likes paying taxes, but if the burden were broadened, and the system were made more fair, the burden for the average person would be far more bearable. By indulging in labeling, the Baldacci administration has alienated town officials who could be partners, rather than adversaries, in finding better solutions to our tax problems.

Mitch Lansky is a selectman in Reed Plantation.